Jan. 24 (Bloomberg) -- The U.K. must avoid over-taxing
“highly-paid” executives or it risks losing investment to
other countries, said the Confederation of British Industry’s
outgoing director-general.

“After the tax increases of the past year, the take-home
pay of a U.K. executive now ranks way below that of someone
receiving similar compensation in just about all competitor
jurisdictions,” Richard Lambert said in London today in his
last public speech as head of Britain’s biggest employers’
group. “This is a problem.”

Controversy over bonus payments to executives has focused
particularly on Britain’s banks, with Prime Minister David
Cameron saying on Jan. 17 that his government is holding
detailed talks with lenders over pay and pressing for lower
payouts. Barclays Plc Chief Executive Officer Robert Diamond
told lawmakers on Jan. 11 that his bank would “exercise
restraint” on bonuses.

Lambert said the issue of taxing executive compensation is
“not just for the City of London,” adding that “business
investment in the U.K. will suffer if highly-paid individuals
drift elsewhere for tax reasons.” Still, there should be “a
greater emphasis on long-term performance as opposed to short-term shareholder value,” he said.

Lambert, a member of the Bank of England’s Monetary Policy
Committee between 2003 and 2006, said the current level of
inflation is a “serious concern” and he sees interest rates
rising later this year.

He also said the government has not focussed enough on
policies to support the economic recovery.

It’s been “single-minded -- some might even say
ruthless -- in its approach to spending cuts,” he said.
However, it “has not been nearly so consistent and focused when
it comes to policies that support growth” and “it’s taken a
series of policy initiatives for political reasons, apparently
careless of the damage that they might do to business and to job
creation.”